Capitalism's Myths  and Realities

  Capitalism's Myths  and Realities

  Capitalism's Myths  and Realities

Capitalist Myths

The Invisible Hand of the Market

    The invisible hand is a theory contrived by the economist Adam Smith. In a free market, Smith claimed, an individual pursuing his own self-interest will also promote the good of his community as a whole. Each individual maximizing income for himself will maximize the total revenue of society as a whole.


    A theory contrived by eighteenth century French economists such as Saint-Simon that the market should not be regulated by the state. A capitalist myth maintaining that private initiative and profit are best provided a minimum of economic interventionism and taxation by the state beyond what is necessary to maintain individual liberty, peace, security, and property rights.

Other Capitalist Myths

  • "Free trade is the only way to order international commerce"

  • "Capitalists should pay little or no tax because they are the engine of the economy"

  • "Unemployment and poverty are natural, inevitable afflictions in any economic system"

  • "The United States has the right to attack any nation which threatens the economic interests of its rulers"

  • "Economic efficiency is only possible under capitalism"

  • "All manufacturing, public utilities, and commodities should be privately owned"

  • "Capitalists ought to be able to make as much money as they can, no matter what the plight of the workers"

  • "All things are working together for the best in this best of all capitalist worlds"

Capitalist Reality

     Under the capitalist "wage slave" system you don't receive the full compensation for your work. By the very nature of the employer-employee relationship, you get less compensation than you should, because the employer takes excessive profits. Let's take a look at how this happens by examining a very simple example of an exchange.

  The raw material to produce a sack of ground wheat, let's say, costs $1.00   The means of production costs $2.00 1   The owner of the means of production pays you $1.00 for your labor
  The owner sells the sack of ground wheat for $8.00 The capitalist has paid $1.00 for the wheat grain, $2.00 in production costs, and $1.00 for your labor--a total of $4.00--for a commodity which he now sells for $8.00. His profit is $4.00 or 100%. The capitalist owner of the means of production makes 400% more in profit than you do in wages, plus he owns and can sell the means of production whenever he wants. He creates an "army of the unemployed" to decrease his labor costs, through outsourcing or encouraging illegal immigration.
The ratio of average chief executive pay to worker pay was 431 to 1 in 2004, up from 301 to 1 in 2003.

     The stark reality of "wage slavery" is that the owners of the means of production (capitalists) are now taking the jobs of American workers to chattel labor nations such as China, Mexico, and many others. The owners want to pay even less for labor than they now are and they want cheaper production costs as well. They don't care if the workers in these other countries are in literal bondage to their overseers, as in Asian sweatshops. And they certainly don't have any concern if American workers become destitute and homeless.

     According to the US Census Bureau, 35.9 million Americans live below the poverty line, including 12.9 million children. As defined by the government and updated for inflation using the Consumer Price Index, the average poverty threshold for a family of four in 2004 was $19, 307; for a family of three, $15,067; and for a family of two, $12,334.

   Instead of capitalism insuring that the economy works for the good of all citizens, capitalists make sure they receive at least 800 times what the average workers receives.

     When capitalist corruption leads to losses for banks and companies:

  • Taxpayer money bails them out

  • Workers are dumped!

  • Banks aren't
    allowed to fail

  • Corporate crime is encouraged

  • Taxpayers are forced to support capitalists

  • Taxpayers drown

  • The Capitalist Coach

    "By way of attempting to give the reader some general impression of the way people lived together in those days, and especially of the relations of the rich and poor to one another, perhaps I cannot do better than to compare society as it then was to a prodigious coach which the masses of humanity were harnessed to and dragged toilsomely along a very hilly and sandy road. The driver was hunger, and permitted no lagging, though the pace was necessarily very slow. Despite the difficulty of drawing the coach at all along so hard a road, the top was covered with passengers who never got down, even at the steepest ascents. These seats on top were very breezy and comfortable. Well up out of the dust, their occupants could enjoy the scenery at their leisure, of the coach persons were slipping out of them and falling to theor critically discuss the merits of the straining team. Naturally such places were in great demand and the competition for them was keen, every one seeking as the first end in life to secure a seat on the coach for himself and to leave it to his child after him. By the rule of the coach a man could leave his seat to whom he wished, but on the other hand there were many accidents by which it might at any time be wholly lost. For all that they were so easy, the seats were very insecure, and at every sudden
    jolt ground, where they were instantly compelled to take
    hold of the rope and help to drag the coach on which they
    had before ridden so pleasantly. It was naturally regarded
    as a terrible misfortune to lose one's seat, and the
    apprehension that this might happen to them or their
    friends was a constant cloud upon the
    happiness of those who rode.

    "But did they think only of themselves?
    you ask. Was not their very luxury rendered
    intolerable to them by comparison with the lot
        of their brothers and sisters in the harness, and
    the knowledge that their own weight added to their
    toil? Had they no compassion for fellow beings from
    whom fortune only distinguished them? Oh, yes; com-
    miseration was frequently expressed by those who rode for

    those who had to pull the coach, especially when the vehicle came to a bad place in the road, as it was constantly doing, or to a particularly steep hill. At such times, the desperate straining of the team, their agonized leaping and plunging under the pitiless lashing of hunger, the many who fainted at the rope and were trampled in the mire, made a very distressing spectacle, which often called forth highly creditable displays of feeling on the top of the coach. At such times the passengers would call down encouragingly to the toilers of the rope, exhorting them to patience, and holding out hopes of possible compensation in another world for the hardness of their lot, while others contributed to buy salves and liniments for the crippled and injured. It was agreed that it was a great pity that the coach should be so hard to pull, and there was a sense of general relief when the specially bad piece of road was gotten over. This relief was not, indeed, wholly on account of the team, for there was always some danger at these bad places of a general overturn in which all would lose their seats.

    From Edward Bellamy, Looking Backward

    References and Updates:

  • Ezequiel Adamovsky's Anti-Capitalism

  • Anti-Capitalism

  • Implementing Anti-Capitalism

  • Circle City Concept


    1 The grain mill in total costs the capitalist $30,000. But the use of the mill for the specific grinding of the wheat grain to produce one bushel of wheat flour is $2.00.